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HOME 2013 Rent Limits

Monday, June 17th, 2013

*updates added here

Written by Lois Churchill, Spectrum Enterprises

So, have you noticed that the 2013 HOME rent limits have been published? If not, you need to check – and quickly! They went into effect 6/1/13.

The reason HUD took so long to get them out was that they figured out the rent limits have never been lowered when income limits went down although they should have been. While income limits for existing HOME properties are “held harmless” rent limits weren’t supposed to be but have been – up until now.

You can find the explanation as well as the link to the HOME rent limits on the home page of our web site. Be aware that for those of you who have LIHTC properties with HOME units you may have to lower the maximum allowable rents for the HOME units to be in compliance with both programs!

Wait Lists at LIHTC Properties

Thursday, September 27th, 2012

Twice in the past 24 hours we received a call asking if keeping a wait list is required for tax credit properties so it seems the issue should be discussed.

While Section 42 itself has no requirements for owners maintaining wait lists there are two very good reasons to do so: The Vacant Unit Rule and General Use compliance.

The Vacant Unit Rule (VUR) requires owners to make reasonable attempts to re-rent units. This means marketing. It can be reasonably presumed that if you have a wait list for your units you’ve marketed.

By Lois Churchill, Head of State Monitoring

The IRS has stated that failure to market vacant units is not only a violation of the VUR but also a general use violation. How are people supposed to know you have units if you don’t market? If you don’t keep wait lists for your tax credit properties then you’d better have marketing either continual or started each and every time you receive a notice to vacate from a tenant.

Other programs involved with your property may require you to maintain a wait list. If you do keep wait lists be sure to do frequent, but at least annual, updates to keep your list fresh!

Gross Rent Floor

Thursday, April 12th, 2012

Written by Lois Churchill, Spectrum Enterprises

Gross rents at a tax credit property never have to fall below what they are the first credit year. This is known as the Gross Rent Floor. But how is the gross rent floor determined?

Rev. Proc. 94-57 gives guidance:

  1. If the taxpayer received an allocation of credit under IRC §42(h)(1), the IRS will treat the gross rent floor as taking effect on the date the state agency initially allocated the housing credit to the building
  2. For a bond-financed building described in IRC §42(h)(4), the IRS will treat the gross rent floor as taking effect on the date the state agency initially issues a determination letter to the building.

However, in either case, the building owner has the option to choose the building’s placed in service date as the date the gross rent floor takes effect. This can happen if the building owner informs the state agency that made the allocation of this decision no later than the placed in service date. If this is done, the IRS will treat the gross rent floor as taking effect on the building’s placed in service date.

NCSHA’s HFA Institute Reflections – HOME Proposed Rule

Friday, January 20th, 2012

Written by Lois Churchill, Spectrum Enterprises

NCSHA held its annual HFA Institute last week in Washington DC. I was able to attend both the HOME and the LIHTC modules this year.

The major topic during the HOME module was the publication on December 16, 2011 of the HOME Proposed Rule. The comments period runs through February 14, 2012 so be sure to read and send comments before that date!

The Proposed Rule makes lots of changes most of which affect the Participating Jurisdictions (PJs) only so I won’t go into those here. What will affect properties directly (if the rule is approved as is currently written) include:

  • Time limit to initially qualify a new HOME unit. The rule states that if a HOME rental unit is not leased to an initial income eligible tenant within a specified time the PJ must submit information about the current marketing plan and possibly a plan for more aggressive marketing. The timeframe being discussed is between 3 and 6 months. The PJ will have to repay HOME funds invested in a rental unit that isn’t initially leased within 18 months.
  • Monitoring fees will no longer be prohibited. The rule will allow PJs to charge reasonable annual monitoring fees to owners of HOME rental projects to which HOME funds are committed on or after the effective date of the final rule. Existing properties will not be subject to monitoring fees as the rule is currently written.
  • Physical inspections – the rule will require the PJ to inspect each HOME project at completion and during the affordability period. The frequency will change. The project will have to be inspected upon completion, at 12 months after completion, and at least once every three years thereafter. Also, the minimum standard will be UPCS if the rule passes, not HQS, except for TBRA. State or local code, if more stringent, will be the standard. The sample of units inspected may also change. For projects with one to four HOME units all buildings containing a HOME assisted tenant and 100 percent of the HOME units would be inspected. For projects with more than four HOME units at least 20 percent of the HOME units in each building but not less than four.
  • HOME units in the project and one in each building would be inspected. Please note there are substantial changes developers need to be aware of regarding new construction and rehabilitation standards for HOME assisted projects/units.
  • Students – please send comments about this one! HUD is proposing to use the same restrictions on student eligibility that they use for the Section 8 program. Specifically the proposed rule reads “An individual does not qualify as a low-income family if the individual is enrolled as a student at an institution of higher education, as defined under section 102 of the Higher Education Act of 1965; is under 24 years of age; is not a veteran of the United states military/ is unmarried; does not have a dependent child; and is not otherwise individually low-income or does not have parents who qualify as low-income.” This rule was adopted for Section 8 to stop otherwise dependent and/or ineligible students from receiving subsidy. There is no subsidy in a HOME assisted unit. It’s unclear why HUD wants to adopt this definition for HOME. It’s clear that student housing isn’t allowable or if it isn’t let’s make that clear. Because the majority of HOME rental units are in developments that are also subject to LIHTC rules, why not adopt the LIHTC student definitions for HOME eligibility as well? Read this section (in the definition of low-income families) and send comments.
  • Income definitions – the definition of income using the Census long form will be eliminated. The definition based on the IRS definition of adjusted gross income will be revised to require that federal government cost-of-living allowances that are not include in adjusted gross income be added to the adjusted gross income of applicants for HOME assistance for the purpose of determining income eligibility. This would affect federal civilian employees or federal court employees who are stationed in Alaska, Hawaii, or outside the US. Also, for those using the chapter 5 definitions of income the proposed rule would required at least 3 months of earning documentation (e.g., wage statements, interest statements, unemployment compensation). The 3 month minimum earnings examination would codify already recommended practice.

Electronic comments on the HOME Proposed Rule may be submitted through the Federal eRulemaking Portal as http://www.regulations.gov. Electronic submission of comments is strongly encouraged over paper submission. However those may be sent to the Regulations Division, Office of General Counsel, Department of Housing and Urban Development, 451 7th Street SW., Room 10276, Washington, DC 20410-0500.

The Federal Register is Volume 76, No 242, Friday, December 116, 2011, pages 78344 through 78382.

Thursday, September 29th, 2011

Written by Lois Churchill, Spectrum Enterprises

HUD has given clear guidance to be followed when determining whether an individual is to be counted as a household member, both for household size and for income limit calculations. Refer to page 3-8 of the HUD 4350.3 REV-1. It states that when determining family size for establishing income eligibility the owner must include all persons living in the unit except the following:
  1. Live-in aides (need for and qualification as an aide must be verified)
  2. Foster children or foster adults
  3. Guests
When determining family size for income limits, the owner must include the following individuals who are not living in the unit:
  1. Children temporarily absent due to placement in a foster home;
  2. Children in joint custody arrangements who are present in the household 50% or more of the time;
  3. Children who are away at school but who live with the family during school recesses;
  4. Unborn children of pregnant women
  5. Children who are in the process of being adopted
  6. Temporarily absent family members who are still considered family members. For example, the owner may consider a family member who is working in another state on assignment to be temporarily absent.
  7. Family members in the hospital or rehabilitation facility for periods of limited or fixed duration. These persons are temporarily absent as defined.
  8. Persons permanently confined to a hospital or nursing home. The family decides if such persons are included when determining family size for income limits. If such persons are included, they must not be listed as the head, co-head, or on the lease as other than a household member. This is true even when the confined person is the spouse of the person who is or will become the head. If the family chooses to include the permanently confined person as a member of the household, the owner must include income received by these persons in calculating family income.

Income Limits

Thursday, July 21st, 2011

Written by Lois Churchill, Spectrum Enterprises

The 2011 income limits went into effect for all programs except HOME on 5/31/11. You must begin using them no later than 7/15/11. HOME limits for 2011 have now been published and are effective 7/23/11.

Remember when determining the income limit for a particular unit that you must use the most restrictive. If the unit has more than one program attached and one is lower than the other, using the lower will keep you in compliance with all programs.

While the tax credit program income limits do not go down that is not the case with all programs. This is reason to be especially careful.

Income limits for tax credit properties are available at www.huduser.org/portal/datasets/mtsp.html. HOME income limits are available at www.hud.gov/offices/cpd/affordablehousing/programs/home. HOME rent limits are also available at that location.

Companion Animals

Thursday, April 28th, 2011

Written by Lois Churchill, Director of State Monitoring Operations

A companion animal, unlike an assistive animal, is one with no special training in helping an individual cope with a disability. However, it is considered necessary for a member of a tenant household to cope with a disability.

The key words here are “disability” and “necessary”.

The individual claiming to have a companion animal must meet the definition of disabled. Handicap and disability have been determined to have the same meaning under Fair Housing law.

According to Fair Housing law, “Handicap” means, with respect to a person, a physical or mental impairment which substantially limits one or more major life activities; a record of such and impairment; or being regarded as having such an impairment.

“Major life activities” means functions such as caring for one’s self, performing manual tasks, walking, seeing, hearing, speaking, breathing, learning, and working.

If a tenant isn’t disabled, the animal is not a companion animal by law.

It is not required that a doctor be the one to verify a disability. This can be done by another professional or even a family member or close friend. However, the need for a companion animal must come from a doctor or other professional (e.g., psychologist). The form you send should ask if the animal is necessary to cope with the disability and what function it performs. It’s been medically proven that animals can lower blood pressure, help a depressed individual cope, etc. Again, is it required? If the doctor says a dog will encourage the individual to get out and exercise, it’s not serving the required purpose. Anyone can walk without a dog. Motivation is not related to a disability. Helping prevent loneliness is a good thing but anyone can be lonely. Loneliness by itself is not a disability, therefore the animal that is helping prevent the “condition” is not a companion animal by law.

An example I used to see in family housing was the doctor’s note saying that being able to keep the family animal will help little Johnny (or Jonnie) cope with the move. Well, if the child isn’t disabled the animal isn’t a companion animal by law.

Tenants are learning that “companion animals” are allowed in apartment complexes with a no pets rule and are taking advantage of the loose definition. Therefore it is important that your forms are strong and that you stick by them. It is not discrimination to say no to a non-disabled household requesting a companion animal. It is not discrimination to say no to a disabled tenant whose animal isn’t “required” to help him or her cope with their disability.

The form going to the doctor should clearly define “handicap” and ask if the tenant meets the definition. It should go on to ask how the animal in question aids in helping the tenant cope with the disability. If there is more than one animal, ask how each meets a different need. Then the form should have a check box saying “I agree if necessary to appear in a court of law to support these statements”.

While most doctors are willing to help out a patient by signing the disability statement this additional statement might make them think twice about it.

Staying in Compliance With All Your Regulatory Documents

Thursday, April 7th, 2011

Written by Lois Churchill, Director of Operations for State Monitoring

Good management companies spend a lot of time making sure they stay in compliance with Section 42 requirements. Everyone wants to avoid those nasty 8823s. However there are “other” requirements/promises that must be complied with as well.

Tax credit awards are very competitive and developers/owners make a lot of promises to the State Allocating Agency to obtain awards. It is then up to management to make sure that all promises are kept. Spectrum tells participants during trainings that they need documents to know what those promises are in order to keep them. Management needs copies of the tax credit application, loan agreements, grant documents, as well as the Tax Credit Regulatory Agreement (LURA, EUA, LURC). Then management needs to read those documents to find out what their particular requirements are.

The Tax Credit Regulatory Agreement should be read in its entirety as it will also stipulate what may be requirements for all tax credit properties in that particular state. Remember that State requirements may be more restrictive than Federal requirements. For example, Section 42 regulations state that subsidy received is not to be included in gross rent calculations and also that if a tenant receives subsidy their portion of the rent may exceed tax credit maximum allowable. Does your State Allocating Agency allow that? Some don’t.

While violation of conditions of the Regulatory Agreement or other documents may not result in the issuance of an 8823 it might take the owner out of contention for future credit awards!

NCSHA Notes by Lois Churchill

Thursday, January 27th, 2011

Cathy Turner and I attended the HOME portion of the NCSHA HFA Institute in D.C. last week. Here are notes worth sharing:

  • The biggest issue noted was in regards to housing for persons with disabilities. We were told time and time again that while housing may target or give preference to persons with a particular type of disability HUD is warning that there is a potential Fair Housing violation if you refuse to rent to a person with any type of disability that otherwise qualifies. For example, if you have a group home for the developmentally disabled and someone applies with a different disability, you cannot refuse to rent to them solely because they are not developmentally disabled. Another example is housing for the mentally disabled; you cannot refuse to rent to someone with a physical disability. Your marketing must be to all persons with disabilities, although it may state your preference for a specific disability. Wait lists are to be reviewed for reasons applicants are refused housing to ensure Fair Housing law is not violated.

However , The Fair Housing Act doesn’t state that you cannot have housing for specific types of disability. In fact, it states that one of the few instances when an owner may ask about a handicap is in “inquiry to determine whether an applicant is qualified for a dwelling available only to persons with handicaps or to persons with a particular type of handicap” (100.202(c)(2)).


Nothing too earth shattering here. Here were a few points where I made notes:

  • HOME rents & income limits may be more restrictive than LIHTC (FMR is HOME rent cap)
  • If HOME funds are received through a grant, eligible basis is reduced
  • Utility allowances may differ for HOME assisted units and LIHTC units
  • Prohibited lease conditions – FYI, dry housing not allowed, mandatory counseling not allowed. Again here the issue about housing for specific types of disabilities was brought up.
  • The one area where HOME rules defer to LIHTC rules is in regards to households going over income (140% rule)

We were also provided with a handy HOME & LIHTC COMPARISON CHART.


Still a proposed rule and fund is not yet funded, but the program was reviewed for when it does go active.

  • HTF will be a new Subpart N of HOME program (24 CFR Part 92). It is not a program itself, but a source of funds.
  • Income targeting will be to ELI and VLI households at a 75/25 ratio. In the first year of funding, 100% of HTF funds must be used to produce units that benefit ELI families or families with incomes below the poverty line, whichever is greater.
  • One item noted as being unique to HTF is that operating costs of HTF-assisted rental housing are an eligible activity (not more than 20% of each annual grant). It was noted that the suggestion is that this be used as an additional reserve account to pay gap of Section 8 lost.
  • HTF will use HUD published rents. While the slide appeared to show that rents are set by household size we were told that this is not true.
  • Minimum affordability period of 30 years was determined based on the assumption that HTF will be used with LIHTC which has a 15 & 15 affordability period.
  • Funds may not be used for public housing, including HOPE VI housing operated as public housing.
  • Funds are not to go to already affordable housing projects, meant to increase the number of affordable units.
  • HTF will use UPCS inspection standards at a minimum, not HOME’s HQS. Must meet applicable property standards at time of acquisition or be rehabbed to meet them
  • On site inspections must occur 12 months after project completion and at least once every 3 years.
  • Calls for follow-up inspections within 12 months or within a reasonable time frame established by grantee for projects with observed deficiencies. I asked if there was a particular level of observed deficiency that would trigger a re-inspection. I reminded them that a missing sink stopper (level 1) is an observed deficiency but would something as minor as that require a follow-up visit. They actually made note of my comment for follow-up discussion. More to come!


I had really looked forward to this session as Spectrum Enterprises has not been allowed to attend any of the HUD sponsored HOME trainings in compliance.

  • Affirmative marketing procedures of a PJ is monitored by HUD. Affirmative marketing is required for projects with 5 or more HOME-assisted units. Presentation reminded all that the plan must include special outreach to those least likely to apply. HUD looks to see that PJ has an affirmative marketing procedure that they relay and require of owners.
  • A written Tenant Selection Criteria is required.
  • A written waiting list must be maintained by owners.
  • There is no one specific HOME rule on maximum number of people per unit. PJ should establish standards based on local code if any.
  • Not a HOME violation if unit is under-utilized or overcrowded. Overcrowding may be a lease violation if there is an occupancy standard in place however.
  • Leases in use at HOME properties must be approved by the PJ, are required, must include rent and procedures for changes in rents, and must not contain any HOME prohibited clauses.
  • Timing of rent changes when households go over income – cannot change rent from Low to High HOME until the Low HOME unit is substituted. Can change rent for over income HH (over 80% AMI) as permitted by lease, do not need to wait for substitute unit.
  • Property standards also include UFAS standards for handicapped access. PJs may adopt more stringent standards than HQS.
  • PJs must verify compliance with HOME requirements each year. The desk review for property condition includes pictures of the property, maintenance records, sub work orders, and tenant complaints. A drive-by is also recommended.
  • The Occupancy portion of the annual reporting should include whether or not the property complies with property standards.
  • There should also be a Property Management portion of the annual report (recommended) that notes pending capital improvements, status/turnover in property management staff, as well as significant issues that the property is facing such as crime, high unit turnover, and high vacancy.

The session then went on to talk about signs of distressed properties.


I got absolutely nothing out of this session. It was merely the presenter asking if people had any problems with NSP, nothing about the program itself.

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